IPO News Desk

Willing to Wait: RWs Dwindle as Companies Try to Get IPO Timing
Right

The IPO market enjoyed a productive second quarter in which
50 deals were completed (through June 20th) compared to 28 in
the first quarter. Noteworthy among the second quarter IPO
statistics is the low number of withdrawals. With only a week
remaining in the quarter, only two Forms RW have been filed
since the beginning of April. Barring a rush of withdrawals
before the end of June, it will be the lowest quarterly total
for RWs in the past ten years. The only other quarter with an RW
count in the single digits during that time period was the first
quarter of 2010 with 8.

As of June 20th, the market had gone seven consecutive weeks
without the withdrawal of a preliminary registration. The
drought suggests a slowdown in M&A activity, which is one reason
companies pull out of planned IPOs. In addition, IPO hopeful
companies seem willing to wait to get the timing of the offering
right, rather than choosing to cut and run.

The reason most often cited for an IPO withdrawal is adverse
market conditions. At the moment, the broader market is strong,
giving companies in the IPO pipeline no reason to abandon their
plans. Other factors are favorable as well. Deals are getting
done relatively quickly this year with 46% of 2017’s IPOs being
completed within 30 days of initial public registration. In
addition, 57% of new issues have priced within their initial
price range. In the aftermarket, 41 of the year’s 76 IPOs are
currently trading above their offering price.

Since the start of 2017, there have been 20 withdrawals. At
the current rate, this will be the slowest year for RWs in the
past decade. Currently, 2013 claims the lowest total in the past
decade with 46 withdrawals. Between 2008 and 2014, the average
number of IPO withdrawals per year was 72. Last year there were
65 abandoned deals, and 60 in 2015. The 2008 through 2014
average was inflated by 2008, the year the global financial
crisis took hold and112 companies withdrew IPO plans. It is the
only time the RW count has topped 100 in the past 10 years.

Among the 20 companies that have withdrawn so far this year,
half are non-U.S. companies. That includes the three most recent
Form RW filings, and four of the last five. In 2016, only 23%
(15 of 65) of the withdrawals were filed by non-U.S. companies.
That is comparable to 2015 when 13 of the 60 (22%) abandoned
deals were for companies headquartered outside the U.S. In 2011,
18 RWs were filed by non-U.S. companies, the highest annual
total in recent years.

Lead Managers - Of the 200
registrations withdrawn since January 1, 2014, Bank of
America was lead manager on the largest number (45).
The investment bank was listed as lead underwriter on 22.5% of
proposed offerings that were pulled over the past four and a
half years. Bank of America was the sixth busiest lead
underwriter of completed IPOs in that same period with 117 new
issues.

JPMorgan was the busiest lead
manager of IPOs between January 1, 2014 and June 20, 2017 with
153 Pricings. It was lead underwriter on 44 withdrawn IPOs (22%) since
the start of 2014, the second highest total behind Bank of
America. The two investment banks have each tallied five RWs so
far in 2017, tying it for first place this year. Five banks are
tied for third this year with three withdrawals apiece.

Since January 1, 2014, Citigroup
has worked on 34 withdrawn deals, the third most over the past
several years, and three ahead of Goldman Sachs.
Credit Suisse rounds out the top five with 30
withdrawals in the 2014 through June 2017 timeframe.